How a second charge bridging loan can help - by Tomer Aboody

An increasing number of people in need of extra cash are
turning to second charge bridging finance to purchase investment properties,
inject capital into businesses or make refurbishments in order to prevent
disturbing their existing attractive mortgages.

A second
charge bridging loan is secured against a property that already has an
outstanding loan or mortgage. It is a great solution for those who want to
raise capital but don’t want to remortgage cheap tracker or fixed rate deals.

A second
charge bridging loan can be secured on all property types, including
buy-to-let, residential and commercial assets, and typically has a 12-month
maturity, unlike a secured loan which is a form of longer-term financing.

Some £67.4m of second charge bridging loans were made in
2015, representing 15.5% of all bridging loans throughout the year, according
to Bridging
Trends Data, a quarterly publication conducted and compiled by bridging
lender MTF and a number of the industry’s specialist finance brokers.

As it sits behind a first charge loan, a
second charge is usually more expensive, reflecting the additional risk taken
by a finance provider. However, rates offered by specialist bridging lender MTF
are very competitive and start from just 0.99% per month, at 60% loan-to-value
(LTV).

At MTF, we believe a second charge bridging loan is about
empowering borrowers to enable them to take advantage of time-sensitive
opportunities that can make or save them money.

For example, MTF was recently approached by a borrower who
wanted make improvements to an investment property in Brixton. The borrower
already had a first charge mortgage in place which they didn’t want to alter, but
needed access to funds quickly in order to refurbish the property and improve
the value to attain a higher rental income.

Within days MTF was able to provide the required £285,000
bridging loan, at 64% LTV on open market value.

The bridging loan gave the borrower the funds needed to
complete the project and the time and space required to put viable, longer-term
financing in place.

A bridging
finance company is often able to make lending decisions within hours of
initial enquiry, allowing funds to be released quickly and providing a speedy
solution before the sale of an asset or longer-term financing is found.